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Further Clarification

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Further Clarification

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Confused Hi,
Thanks for your excellent help thus far. I have read your help section and still need a clarification on the Chart for "Efficient Frontier and the Portfolio Set". There are two parabolas in the chart. Is one for the optimized portfolio and the other is for the test or "input" portfolio? The help section was not clear on this.
thanks again,
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Sure! In the efficient frontier chart:
- One parabola represents the efficient frontier, showing optimal portfolios that maximize return for a given level of risk (or minimize risk for a given level of return).
- The other parabola or curves may represent different portfolios or scenarios being compared against the efficient frontier to assess their risk-return trade-offs.
The efficient frontier parabola is for optimized portfolios, while the other parabola(s) are for comparison purposes, representing different portfolio options or scenarios.
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The blue curves on the efficient frontier chart map the different weightings of assets between 4 main points: maximum return at the top, minimum return at teh bottom, minimum risk to the left and maximum risk to the right.

The right part of the frontier is often inward curving as a result of the risk reduction on combined correlated assets.

The blue point on the chart represents the risk/return of the current portfolio and the green point is the optimized portfolio based on the strategy selected.
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